Op-ed: Why it makes sense for Apple to plan a Pandora rival

We already have plenty of music streaming options, but none go through Apple.

On Thursday this week, the Wall Street Journal published information claiming that Apple is working on a Pandora-like music service to allow iOS users to create custom radio stations to stream wherever they go. The New York Times soon followed up with its own report on the story—citing its own sources—claiming the service would likely come as a preinstalled app on iOS devices that could determine a user's tastes based on what was purchased from their iTunes accounts. The WSJ indicated the service would also be available on Macs and PCs, but probably not on Android devices.

For those who have followed Apple news and rumors for years, this one sounds familiar. That's because rumblings about Apple's alleged plans to launch a streaming/subscription music service date back to (at least) 2007, when Apple apparently indicated to INTENT MediaWorks CEO Les Ottolenghi that a subscription music service—as opposed to iTunes' current download model—was imminent. The rumor popped up years later when it was believed that Apple would charge $10 to $15 per month for a music subscription.

But iTunes Match is no Pandora, or Last.fm, or Rdio, or Spotify. It's mostly dependent upon the customer continuing to purchase individual songs from the iTunes Store, though users can also use iTunes Match to match ripped MP3s. When all you want to do is choose a genre or song to start from and be taken on a musical journey from there, the options available from Apple are limited. That's part of why services like Pandora (and now Spotify Radio) have gained such popularity in recent years—many people who were once dedicated iTunes buyers have since moved onto one of the many streaming services available to us.

Hell, even my physical therapist told me that she, her friends, and her colleagues had all switched away from buying iTunes music to listening to Pandora. Even if Pandora isn't your streaming service of choice, it's clear that even the general public is beginning to look at other options.

And that's the most likely reason why Apple would want to follow suit. The Times cited analyst Michael Pachter asking what's in it for Apple: "Pandora already does a great job, so does iHeartRadio, so does Last.fm. Why do we need another one?"

The answer is because Pandora, iHeartRadio, Last.fm, and the others aren't feeding money through Apple. It doesn't matter that advertising in audio streams—which Apple is rumored to be planning for its Pandora clone—doesn't bring in much revenue, and it matters even less that all these services already offer apps for Apple's products. The Times report estimates that the Internet radio business accounts for "less than $1 billion a year in revenue," but that's $1 billion that Apple is currently getting no part of.

If it's true that Apple is again in talks to launch a streaming service—and I'm inclined to believe that it's at least possible, given the leaks to high-profile publications like the WSJ and NYTimes—then it's most likely because Apple simply wants a slice of the streaming pie. iTunes remains wildly popular (it's still the number one music retailer in the US, after all) but longtime users have wandering eyes. Non-Apple streaming services are breaking into the mainstream and Apple may not want to miss that boat when it comes to bringing in revenue from its millions of iPhone, iPad, and iPod touch users. The fact that we already have plenty of other streaming options is practically irrelevant to Apple, because none of those options keep Apple's user base planted where the company thinks they belong: in Apple's ecosystem.

I can see why Apple wants to have such a service, but is there any reason why we the consumers want it? Pandora seems to be a pretty solid service by now. I'd figure that to succeed Apple's service needs more going for it than "It's from Apple" and "It plays nice with Apple devices." The latter isn't so much an advantage of an Apple streaming radio, as it is an indictment of how Apple's closed-off approach can be a hindrance to its customers.I don't want this to devolve into a thread on Apple-hating. They're capable of good products, but it seems awfully premature to talk about how a service we know virtually nothing about is a good idea.

I can see why Apple wants to have such a service, but is there any reason why we the consumers want it? Pandora seems to be a pretty solid service by now. I'd figure that to succeed Apple's service needs more going for it than "It's from Apple" and "It plays nice with Apple devices." The latter isn't so much an advantage of an Apple streaming radio, as it is an indictment of how Apple's closed-off approach can be a hindrance to its customers.I don't want this to devolve into a thread on Apple-hating. They're capable of good products, but it seems awfully premature to talk about how a service we know virtually nothing about is a good idea.

If this service is available to more than just US it could probably do pretty well. Most of these internet radio/streaming music services are limited to the US or a very small selection of european countries. If Apple could get an international launch with 30 or so countries it could probably do very well.

Personally I don't use these kinds of services so to me it would just be another unhideable icon on the home screen.

They're capable of good products, but it seems awfully premature to talk about how a service we know virtually nothing about is a good idea.

simple fact that more options are always a good idea. maybe theirs will be better? if not there are others out there to choose from.

seems odd to fight against choice.

Look at it from another angle - by introducing the service, Apple will likely boot apps for pandora and other services off of its platform, thus restricting choice for iDevice users - like they always do.

Look at it from another angle - by introducing the service, Apple will likely boot apps for pandora and other services off of its platform, thus restricting choice for iDevice users - like they always do.

Look at it from another angle - by introducing the service, Apple will likely boot apps for pandora and other services off of its platform, thus restricting choice for iDevice users - like they always do.

Look at it from another angle - by introducing the service, Apple will likely boot apps for pandora and other services off of its platform, thus restricting choice for iDevice users - like they always do.

Let's just face it, Apple wants to own you when you buy its products.

which services have they booted? i'm not aware of any.

That seems to be the prevalent meme whenever Apple launches a service. Despite the fact that it's never actually happened.

This is really simple guys:

If Apple launches a Pandora competitor that doesn't bring anything to the table it will fail like all the other endeavors Apple launches that don't innovate meaningfully, like Ping or their very lousy Podcasting app.

If Apple launches a Pandora competitor that brings useful functionality that Pandora isn't already providing, then Pandora will be used by fewer users, since Apple will have brought innovations to the market that they were not.

Look at it from another angle - by introducing the service, Apple will likely boot apps for pandora and other services off of its platform, thus restricting choice for iDevice users - like they always do.

Let's just face it, Apple wants to own you when you buy its products.

which services have they booted? i'm not aware of any.

google talk, grooveshark come right to mind.

Grooveshark has been kicked by Google as well, because it's a goddamn copyright infringment haven.

Apple was wrong for getting Google Talk banned however, and the FTC rightly took them to task over the issue.

I think this is great news. When Apple offers something for iOS, it tends to murder the competition also on iOS. This isn't a shocker because Apple really likes all of their services to be dominate and to play well together and as an iOS user, your shit just works better if you stay inside of Apple sphere. If you have an iOS device, it is a no-brainer to use iTunes whenever you can because it is integrated so much better than what a third party like Amazon can offer.

Personally, this makes me happy as an Android user. The explosion of fantastic streaming services has been great. If Apple sucks the air out of the room for these services on iOS, it just means that the Android apps are going to receive even more focus instead of having their efforts split by parallel iOS and Android development. It also means that new services are going to launch of Android first.

As long as Apple doesn't start suing everyone because they patented "selecting streaming music that a listener will like based upon previous ratings" or something as equally stupid and obvious... I kind of hope that Apple kills the competition (on iOS).

Look at it from another angle - by introducing the service, Apple will likely boot apps for pandora and other services off of its platform, thus restricting choice for iDevice users - like they always do.

Apple isn't known for rolling out 'clones' of anything. What they are known for is taking existing products & technologies, and packaging them together into a new and innovative product (mp3 players, smartphones and tablet computers all existed long before Apple revolutionized those markets); don't expect their streaming music service to be any different. A few things they can do to make a streaming music service more 'Apple-y':

Make it an expanded version of Genius playlists, so it has access to all your purchased iTunes tracks (local and iCloud), as well as Apple's full library of music you don't own, streaming from the cloud. This way Apple only has to pay streaming royalties on the songs you don't already own, giving them a leg up in profits over the existing streaming-only services, and perhaps cutting down on the number of ads you're served. Songs you don't own will show up in your played history, but can't be added to your own custom playlists unless you buy them. Buying would be as easy as clicking the 'buy' button on the song entry, as though you're in the iTunes Store. This way they're able to use the streaming service as a trojan horse for the iTunes store, introducing you to new songs based on what you already like, but limiting what you can do with those songs until you purchase them. Some customers will just use the service the same way they currently use Pandora, in which case Apple won't make much money on streaming royalties, but at least they won't lose those users to Pandora/etc. Those customers are also that much more likely to make any potential music purchases through iTunes.

As someone who uses Pandora and buys music from the iTunes Music Store, this seems like an obvious development.

Most of my purchases through iTunes have been prompted by Pandora, and the reason why is important when contrasted with Apple's "Genius" service. The "Genius" connects you with artists similar to what you've just purchased, or similar to what's in your library, but it always strikes me as being present at the wrong times. If I have just purchased some tracks, do I really care about browsing for more? No; I just want to listen to my music. Similarly, if I'm in my iTunes library listening to my music, do I really care about browsing for more songs to buy? No; I never use the "Genius" tab, and the iTunes window is usually hidden. If Pandora didn't exist then I might use it here and there, but Pandora and services like it offer a much more compelling option.

Pandora is an effortless music browser compared with the "Genius" service. I hear full songs, and I am automatically shuffled around a variety of artists and genres that correspond to my preferences. I am browsing without even thinking about it, and without focusing on it. When I come across a song that I really like, bam - that's when a sale is likely to be made.

Apple has usage and sale data. My guess is that they're seeing how infrequently the "Genius" service is used, and how many sales and referrals are coming from the streaming services. They have the user data, the musical library and licenses, and the technical ability to create a service that can rival Pandora and the others. Let's see what they can do.

I suspect Apple is in the same situation that Microsoft was in during the mid-nineties. It has money coming in faster than it can be spent. And I suspect that, like Microsoft, it's falling for the temptation to spend that money in ways that make little business sense.

Apple should be spending more of its money to improve its products. That's the best of long-term investments.

Work productivity is one area where OS X comes up lacking, The built-in spell checker is so pitiful, about a third the time it has nothing to offer for a misspelled word. I do a Google search with that misspelling and about 95% of the time Google knows the right spelling. The result is a lot of wasted time because Apple's too cheap to throw a few hundred thousand dollars at this problem.

OS X also comes up woefully lacking in any ability to move documents around. Several years ago, OS X should have acquired a Digital option in the File menu that'd let me send documents directly to apps on my iPhone or iPad in one simple step--no silly emailing of PDFs or clumsy iTunes synching. And note that is different from iCloud synching within apps. And for those in business, they should also have the ability to send documents directly to colleagues from that Digital menu--again other than a 1970s technology such as email.

Finally, Apple's executives, perhaps reflecting their age, seem to regard WordStar circa 1982 as the last word in word processing. That's why so many third-party apps that use Apple's text services have ruler bars (like WordStar) but not paragraph and text styles (like Word 4.0, circa 1987). Dealing with text documents take up the vast majority of the word people do on their computers and mobile devices, and yet what OS X can do is little changed from the state of the art 30 years ago.

The roots of this silliness aren't hard to figure out. In the mid-nineties, Microsoft owned the business market, so all that was left to Apple were creative professionals and the 'play' use of computers. Apple's ads still reflect that old mindset. Most show young adults playing, taking pictures and listening to music. To see work-related ads, you have to wander off into obscure areas of Apple.com.

And that's also reflected in how Apple updates its house applications. Play products such as iTunes and iPhoto get constant improvements. Those used in day-to-day work, the iWork apps, languish. It almost looks like Apple thinks its typical customer is an overgrown child.

And now Apple wants to throw what's likely to be billions at another play service that's unlikely to ever turn a profit.

Long term, this inability to address the work/productivity share of the market is Apple's greatest weakness. If their opponents focus on it, Apple could be in big trouble.

Pandora not making any money and it never will, oh wait, twitter will never make any money either, oh..wait a minute do you want to buy some Facebook shares? Apple should stay well clear of Pandora.

Pandora doesn't have the "clout" to be able to broker deals in their favor. Apple just might. After all, they were able to force the labels to agree to DRM-free music.

And maybe part of it is due to what I listen to, but even as a Pandora One subscriber I hear a lot of repeats on my "stations." If (if) Apple can put the entirety of the iTMS library in a service like this, they'll have my attention. Plus, Apple has a far more global reach with iTunes than Pandora does.

Quote:

I suspect Apple is in the same situation that Microsoft was in during the mid-nineties. It has money coming in faster than it can be spent. And I suspect that, like Microsoft, it's falling for the temptation to spend that money in ways that make little business sense.

I suspect Apple is in the same situation that Microsoft was in during the mid-nineties. It has money coming in faster than it can be spent. And I suspect that, like Microsoft, it's falling for the temptation to spend that money in ways that make little business sense.

Apple should be spending more of its money to improve its products. That's the best of long-term investments.

Which is exactly what Apple is doing. They are very frugal in what they spend money on and every time they do it's to make something better. Which is why we have had hoards of analysts castigating them over the last few years to buy other companies and give dividends.

Inkling wrote:

Work productivity is one area where OS X comes up lacking, The built-in spell checker is so pitiful, about a third the time it has nothing to offer for a misspelled word. I do a Google search with that misspelling and about 95% of the time Google knows the right spelling. The result is a lot of wasted time because Apple's too cheap to throw a few hundred thousand dollars at this problem.

Wait so Apple is wasting money but too cheap to upgrade its dictionary? The exact same problem you have with OS X (which I have as well) I also have with Windows 7. It's too bad that those dictionaries cannot be taught. Oh wait they can.

Inkling wrote:

OS X also comes up woefully lacking in any ability to move documents around. Several years ago, OS X should have acquired a Digital option in the File menu that'd let me send documents directly to apps on my iPhone or iPad in one simple step--no silly emailing of PDFs or clumsy iTunes synching. And note that is different from iCloud synching within apps. And for those in business, they should also have the ability to send documents directly to colleagues from that Digital menu--again other than a 1970s technology such as email.

This is your one point I can completely agree with. Except I want the exact opposite. I am constantly annoyed at the iCloud integration since I want to store documents where I want to. Yes I'm the guy yelling at kids to get off my lawn. But having an easier way to send a file to a particular application on a mobile device is a good thing.

Inkling wrote:

Finally, Apple's executives, perhaps reflecting their age, seem to regard WordStar circa 1982 as the last word in word processing. That's why so many third-party apps that use Apple's text services have ruler bars (like WordStar) but not paragraph and text styles (like Word 4.0, circa 1987). Dealing with text documents take up the vast majority of the word people do on their computers and mobile devices, and yet what OS X can do is little changed from the state of the art 30 years ago.

I am really not sure what you are talking about here. Is it that you want Apple to make the perfect word processor in their frame work? Secondly many, at least all I own, third party text editors use the Apple frameworks and not one of them has a ruler bar and has multiple styling options based on context and the ability to set styles. Maybe you should be poking the third party vendors here. Or just install MS Office.

Inkling wrote:

The roots of this silliness aren't hard to figure out. In the mid-nineties, Microsoft owned the business market, so all that was left to Apple were creative professionals and the 'play' use of computers. Apple's ads still reflect that old mindset. Most show young adults playing, taking pictures and listening to music. To see work-related ads, you have to wander off into obscure areas of Apple.com.

And that's also reflected in how Apple updates its house applications. Play products such as iTunes and iPhoto get constant improvements. Those used in day-to-day work, the iWork apps, languish. It almost looks like Apple thinks its typical customer is an overgrown child.

And now Apple wants to throw what's likely to be billions at another play service that's unlikely to ever turn a profit.

Long term, this inability to address the work/productivity share of the market is Apple's greatest weakness. If their opponents focus on it, Apple could be in big trouble.

Here is where you go completely off the rails. Apple is a consumer electronics company. Not a company that gives a crap about business needs unless it has to for integration purposes. I'm really sorry that it doesn't fit your business needs but if you think it ever will then you are very mistaken. In addition the idea that things like iPhoto, iMovie and the like are "play products" is just completely off base. They allow average people to make things they never would have been able to without them. Will that land them a million dollar deal? No of course not. But to dismiss them as toys is pig headed at best.

The next point is that Apple has shown over the last decade that they are always concerned about profit. If one service breaks even or turns a small profit that helps their hardware make even greater profits they will do it. Does iTunes ring a bell? How do you think they were able to put of 100 billion dollars in the bank if they didn't think about that?

Lastly the "work/productivity share of the market" is a much smaller market than you think it is. Even if it was 90% of all profit generating revenue for any electronics maker ever Apple probably wouldn't care. They have state repeatedly that they would rather not do something if they couldn't bring something better to market. So while I'm sorry that their business goals don't match up with your desires I really don't think that it's a death knell for the company.

Apple doing it now just seems like a poor attempt to keep the Apple sheep stuck on Apple for all their entertainment "needs", especially since it will never be as good as Pandora or Spotify

Isn't it rather pointless to opine about the quality of a service that CANNOT keep going in its current (money-losing) form? Eventually, Pandora starts making enough money or its owners sell the firm for whatever they can get.

Who would be best able to monetize an on-line music service like this? Google. Reasons why Google would neither buy the firm, nor start a proprietary equivalent, are welcomed; likewise suggestions of any firm that could get more value out of Pandora's (shrinking) assets would be welcome. (In contrast, what assets other than the name, does Pandora bring to Apple?)

Ditch the stupid “Apple sheep” troll-rhetoric and realize that no business would want its customers being locked into Android because Google had a popular but proprietary service in the industry that you initiated. That seems to me a hugely more likely reason than Jacqui's “Apple simply wants a slice of the streaming pie.” They don't make much money at all from iTunes, but they sell LOTS of iProducts from having a nice, complete ecosystem.

Look at it from another angle - by introducing the service, Apple will likely boot apps for pandora and other services off of its platform, thus restricting choice for iDevice users - like they always do.

Let's just face it, Apple wants to own you when you buy its products.

which services have they booted? i'm not aware of any.

google talk, grooveshark come right to mind.

Did Apple ban Google Talk from supporting VOIP calling on Android? There is a lot of delicate treading around at Google on the phone front. They kinda don't want to make VOIP so easy that everybody starts slamming their equipment, and they Definitely don't want to be in a place where carriers see Google as a threat to their complicated, overpriced phone plans (Facebook overage insurance plans starting at $4.95*!).

*Plus sales tax, and an apportioned percentage of any, all, and not limited to the following: corporate excise, property and income taxes, carrier PPE and operating expenses, earnings and capital distributions to shareholders and partners, and personal tax liabilities for certain key operating officers. These imputed fees shall not exceed the greater of $50, or the maximum legal liability allowed by all laws covering your plan contract. You agree to waive all rights to extradition appeals should an alternate law be elected by the carrier to enforce the terms of the plan contract.

Chances are that you had to fight Apple every step of the way in order to do it too. You adapt to Apple products rather than the other way around. The same goes for your "legacy" content.

Where do people get these wacko ideas? My personal preference is to buy CDs (or borrow when I'm visiting a friend, laptop in hand), and rip them into iTunes — trivially easy, and a high bitrate default preserves near-CD quality for my classical and jazz tracks.

Alternatively, I have several albums of MP3s from Amazon or other sources. Just a couple of clicks to put into iTunes, from which my choice of music instantly transfers to my iPhone and iPod. (No choice necessary on a 160GB iPod Classic; despite my huge library it all fits.) Very little music is actually purchased from the iTunes store, which hasn't particularly emphasized stuff to my taste; plus I like having all the original CDs in case of disaster.

I guess it's pretty easy to tell you don't actually use the iTunes services, so I can't imagine why your Talking Points would have the least credibility. Why post such useless rhetoric?

They're capable of good products, but it seems awfully premature to talk about how a service we know virtually nothing about is a good idea.

simple fact that more options are always a good idea. maybe theirs will be better? if not there are others out there to choose from.

seems odd to fight against choice.

It's not necessarily fighting against choice but rather against Apple doing it and retroactively making it the Apple "standard". While I don't think that it's likely that Pandora or Spotify will have the same fate befall them, how many excellent apps have been Sherlock'd by the emergence of an Apple pre-install that performs the same functions? The fact that a streaming service (generally) requires a fee and that Spotify, Pandora, et. al. don't exclusively rely on Apple devices will help to mitigate damage to them, but it's still a valid concern.

Jeez, guys, think like Apple. Everybody's been talking about Apple TV, but it sounds like they're starting with radio! Think of all the devices the iPhone replaces; "radio" seems like addition to the IOS ecosystem. Radio stations already make their content available on the web - something the television moguls are doggedly resisting - but you have to use a browser, plug-ins, or iTunes to listen to them.

Bet they have some content deals and a Flipboard-like interface for personalized program selection, etc.

But wouldn't it be cool if you could listen to your friends libraries as well as your own? If you could create dynamic transient playlists out of a number of friends' playlists, and shuffle? Lots of possibilities once you conclude "audio is audio", and delivery should be transparent.

Chances are that you had to fight Apple every step of the way in order to do it too.

What the hell are you talking about? Loading non-iTunes content onto an iPad, legal or otherwise, is not a challenge for those who breath oxygen.

Apparently Jedediah never heard of "drag and drop". Of the 16 days worth of music and audio in my iTunes, no more than a handful of tracks were purchased from the iTunes store. It includes everything from sound effects to recordings of private performances to spoken word to MIDI files I've created.

Sure, I wish I could export the data to a database for better management (and import the metadata back), and I have no use for Genius, but the one thing which is absolutely *not* a problem is adding whatever audio I want.

But wouldn't it be cool if you could listen to your friends libraries as well as your own? If you could create dynamic transient playlists out of a number of friends' playlists, and shuffle? Lots of possibilities once you conclude "audio is audio", and delivery should be transparent.

"then it's most likely because Apple simply wants a slice of the streaming pie."

No, no, NO!

Don't you have the slightest idea how Apple works?

If they introduce a streaming service, the reason will be to have more people buy Apple *hardware*. The revenue from the actual service is something they will gladly take but not really care about.So you should expect something that makes it easier for users of Apple devices to listen to the music they want. I don't really know what that entails, but only that will sell more iPhones, iPads and Macs. And *that* is where Apple get their money from.

Seems like this should be a regular part of your iTunes experience on the iOS device. Local music, playlists, podcasts, radio, store.

And then, if they want to really be edgy, they port the whole thing to Android. Android overtook iOS a while ago, and I'm sure a bunch of Android people also have Macs, so why not make the money off of them? They should have actually done that before Google figured out prepaid cards, but there's still time while the Google cards are (semi-?) exclusive to GameStop (I haven't seen them anywhere else, but iTunes cards are everywhere). I don't think Android is going to sink iOS by any means (in fact, even as an Android fan, I think iOS may well outlive Android -- the open-source community will replace Android with something bigger/better) but they might as well capitalize on it. Not that I would ever download it or give Apple a dime, but most users (of both platforms) don't have any such loyalty or distaste of either.

Look at it from another angle - by introducing the service, Apple will likely boot apps for pandora and other services off of its platform, thus restricting choice for iDevice users - like they always do.

Let's just face it, Apple wants to own you when you buy its products.

which services have they booted? i'm not aware of any.

It was an absurd argument. The Kindle App is still one f the most popular iOS apps and I doubt he Amazon video player is going anywhere. People just make stuff up.